US Internal Revenue Service: I8582cr - 2004

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Page 1 of 16 Instructions for Form 8582-CR 14:48 - 14-JAN-2005
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2004 Department of the Treasury

Internal Revenue Service
Instructions for Form

8582-CR
Passive Activity Credit Limitations
Section references are to the Internal Revenue Code unless otherwise noted.
• Enhanced oil recovery credit. performed in real property trades or

General Instructions • Disabled access credit. businesses in which you materially
• Renewable electricity production participated and
Purpose of Form credit. b. You performed more than 750
Form 8582-CR is used by • Empowerment zone and renewal hours of services during the tax year
noncorporate taxpayers to figure the community employment credit. in real property trades or businesses
amount of any passive activity credit • Indian employment credit. in which you materially participated.
(PAC) for the current tax year • Credit for employer social security For purposes of item (2), each
(including any prior year unallowed and Medicare taxes paid on certain interest in rental real estate is a
credits) and the amount of credit employee tips. separate activity unless you elect to
allowed for the current year. It also is • Orphan drug credit. treat all interests in rental real estate
used to make the election to increase • Credit for small employer pension as one activity.
the basis of credit property when a plan startup costs.
taxpayer disposes of his or her • Credit for employer-provided child If you are married filing jointly, one
care facilities and services. spouse must separately meet both
interest in an activity.
PACs that are not allowed in the • Nonconventional source fuel credit. (2)(a) and (2)(b) without taking into
current year are carried forward until • Qualified electric vehicle credit. account services performed by the
they are allowed against the tax on • General credits from electing large other spouse.
partnerships. A real property trade or business is
either net passive income or the any real property development,
special allowance, if applicable. redevelopment, construction,
Different rules apply to your Overview of Form reconstruction, acquisition,
activities and the related credit, The form contains six parts. The conversion, rental, operation,
depending on the type of activity. Specific Instructions, starting on page management, leasing, or brokerage
Generally, passive activities include: 9, include, at the beginning of the trade or business.
• Trade or business activities in instructions for each part, a brief
Services you performed as an
which you did not materially explanation of the purpose or use of
that part. These explanations give a employee are not treated as
participate for the tax year. performed in a real property trade or
• Rental activities, regardless of your general overview of how the form
business unless you owned more
participation. works.
than 5% of the stock (or more than
See Trade or Business Activities Also, as you read the instructions 5% of the capital or profits interest) in
on page 3 and Rental Activities on that follow, see Example of How To the employer.
page 2. Complete Form 8582-CR, beginning 3. A working interest in an oil or
For more information, see Pub. on page 5. The example goes gas well. Your working interest must
925, Passive Activity and At-Risk through a six-step analysis of how the be held directly or through an entity
Rules. form and worksheets are completed that does not limit your liability (such
Note. Corporations subject to the for a partner in a limited partnership as a general partner interest in a
passive activity rules must use Form that has a low-income housing credit. partnership). In this case, it does not
8810, Corporate Passive Activity matter whether you materially
Loss and Credit Limitations. Activities That Are Not participated in the activity for the tax
year.
Who Must File Passive Activities If, however, your liability was
The following are not passive limited for part of the year (for
Form 8582-CR is filed by individuals,
activities. example, you converted your general
estates, and trusts with any of the
following credits from passive 1. Trade or business activities in partner interest to a limited partner
activities. which you materially participated for interest during the year), some of
• Investment credit (including the the tax year. your income and losses from the
rehabilitation credit, energy credit, 2. Any rental real estate activity in working interest may be treated as
and reforestation credit). which you materially participated if passive activity gross income and
• Work opportunity credit. you were a “real estate professional” passive activity deductions. See
• Welfare-to-work credit. for the tax year. You were a real Temporary Regulations section
• Credit for alcohol used as fuel. estate professional only if: 1.469-1T(e)(4)(ii).
• Credit for increasing research a. More than half of the personal 4. The rental of a dwelling unit you
activities. services you performed in trades or used as a residence if section
• Low-income housing credit. businesses during the tax year were 280A(c)(5) applies. This section
Cat. No. 64649B

applies if you rented out a dwelling customer use equals the sum of Reporting Credits From the
unit that you also used as a home these class-by-class average periods
during the year for a number of days weighted by gross income. See
Activities
that exceeds the greater of 14 days Regulations section 1.469-1(e)(3)(iii). If an activity meets any of the five
or 10% of the number of days during exceptions listed above, it is not a
Significant personal services
the year that the home was rented at rental activity. You must then
include only services performed by
a fair rental. determine:
individuals. To determine if personal
5. An activity of trading personal services are significant, all relevant 1. Whether your rental of the
property for the account of owners of facts and circumstances are property is a trade or business activity
interests in the activity. For purposes considered. Facts and circumstances (see Trade or Business Activities on
of this rule, personal property means include the frequency of the services, page 3) and, if so,
property that is actively traded, such the type and amount of labor required 2. Whether you materially
as stocks, bonds, and other to perform the services, and the value participated in the activity for the tax
securities. See Temporary of the services relative to the amount year (see Material Participation
Regulations section 1.469-1T(e)(6). charged for use of the property. beginning on page 3).
Generally, credits from these
2. Extraordinary personal services
were provided in making the rental
• If the activity is a trade or business
activities are not entered on Form activity in which you did not materially
property available for customer use. participate, enter the credits from the
8582-CR. However, credits from This applies only if the services are
these activities may be subject to activity on Worksheet 4 on page 11.
limitations other than the passive
performed by individuals and the
customers’ use of the rental property
• If the activity is a trade or business
credit limitation rules. activity in which you did materially
is incidental to their receipt of the participate, report the credits from the
services. activity on the forms you normally
Rental Activities 3. Rental of the property is use.
A rental activity is a passive activity incidental to a nonrental activity.
even if you materially participated in If the rental activity did not meet
The rental of property is incidental any of the five exceptions, it is
the activity (unless it is a rental real to an activity of holding property for
estate activity in which you materially generally a passive activity. Special
investment if the main purpose of rules apply if you conduct the rental
participated and you were a real holding the property is to realize a
estate professional). activity through a publicly traded
gain from its appreciation and the partnership (PTP). See Publicly
However, if you meet any of the gross rental income is less than 2% Traded Partnerships (PTPs) on page
five exceptions listed below, the of the smaller of the unadjusted basis 15.
rental of the property is not treated as or the fair market value (FMV) of the
a rental activity. See Reporting property. If the rental activity is not
Credits From the Activities on this conducted through a PTP, the
Unadjusted basis is the cost of the passive rental activity is entered in
page if you meet any of the property without regard to
exceptions. Worksheet 1, 2, 3, or 4 on pages 10
depreciation deductions or any other and 11.
An activity is a rental activity if basis adjustment described in section
1016. Worksheet 1 is for credits (other
tangible property (real or personal) is than rehabilitation credits and
used by customers or held for use by The rental of property is incidental
to a trade or business activity if: low-income housing credits) from
customers and the gross income (or passive rental real estate activities in
expected gross income) from the a. You own an interest in the trade which you actively participated. See
activity represents amounts paid (or or business activity during the tax Special Allowance for Rental Real
to be paid) mainly for the use of the year, Estate Activities on page 3.
property. It does not matter whether b. The rental property was mainly
the use is under a lease, a service used in the trade or business activity Worksheet 2 is for rehabilitation
contract, or some other arrangement. during the tax year or during at least credits from passive rental real estate
2 of the 5 preceding tax years, and activities and low-income housing
Exceptions c. The gross rental income from credits for property placed in service
An activity is not a rental activity if: the property is less than 2% of the before 1990. This worksheet is also
1. The average period of customer smaller of the unadjusted basis or the used for low-income housing credits
use is: FMV of the property. from a partnership, S corporation, or
other pass-through entity if your
a. 7 days or less, or Lodging provided for the interest in the pass-through entity
b. 30 days or less and significant employer’s convenience to an was acquired before 1990, regardless
personal services (see below) were employee or the employee’s spouse of the date the property was placed in
provided in making the rental property or dependents is incidental to the service.
available for customer use. activity or activities in which the
Figure the average period of employee performs services. Worksheet 3 is for low-income
customer use for a class of property 4. You customarily make the housing credits for property placed in
by dividing the total number of days in rental property available during service after 1989 (unless held
all rental periods by the number of defined business hours for through a pass-through entity in
rentals during the tax year. If the nonexclusive use by various which you acquired your interest
activity involves renting more than customers. before 1990).
one class of property, multiply the 5. You provide property for use in Worksheet 4 is for credits from
average period of customer use of a nonrental activity of a partnership, S passive trade or business activities in
each class by the ratio of the gross corporation, or joint venture in your which you did not materially
rental income from that class to the capacity as an owner of an interest in participate and passive rental real
activity’s total gross rental income. the partnership, S corporation, or joint estate activities in which you did not
The activity’s average period of venture. actively participate (but not
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rehabilitation credits from passive Active participation is a less and your modified adjusted gross
rental real estate activities or stringent requirement than material income.
low-income housing credits). participation (see Material
Participation on this page). You may If your modified adjusted gross
Special Allowance for Rental be treated as actively participating if, income is $250,000 or more
for example, you participated in ($125,000 or more if married filing
Real Estate Activities separately), there is no special
making management decisions or
Active Participation. If you actively arranging for others to provide allowance.
participated in a passive rental real services (such as repairs) in a No modified adjusted gross
estate activity, you may be able to significant and bona fide sense. income limitation applies when
claim credits from the activity for the Management decisions that may figuring the special allowance for
tax attributable to a special allowance count as active participation include: low-income housing credits for
of up to $25,000, reduced by any • Approving new tenants, property placed in service after 1989
passive losses, including the • Deciding on rental terms, (other than from a pass-through entity
commercial revitalization deduction, • Approving capital or repair in which you acquired your interest
allowed under this exception on Form expenditures, and before 1990).
8582, Passive Activity Loss • Other similar decisions.
Limitations.
The maximum special allowance Trade or Business
The special allowance also applies is:
to low-income housing credits and • $25,000 for single individuals and Activities
rehabilitation credits from a rental real married individuals filing a joint return A trade or business activity is an
estate activity, even if you did not for the tax year. activity (other than a rental activity or
actively participate in the activity. The • $12,500 for married individuals an activity treated as incidental to an
credits allowed under the special who file separate returns for the tax activity of holding property for
allowance are in addition to the year and who lived apart from their investment) that:
credits allowed for the tax attributable spouses at all times during the tax 1. Involves the conduct of a trade
to net passive income. year. or business (within the meaning of
The special allowance is not • $25,000 for a qualifying estate section 162),
available if you were married, are reduced by the special allowance for 2. Is conducted in anticipation of
filing a separate return for the year, which the surviving spouse qualified. starting a trade or business, or
and lived with your spouse at any 3. Involves research or
Modified adjusted gross income experimental expenditures deductible
time during the year. limitation. If your modified adjusted under section 174 (or that would be if
Only an individual, a qualifying gross income (defined in the you chose to deduct rather than
estate, or a qualified revocable trust instructions for line 10 beginning on capitalize them).
that made an election to treat the page 10) is $100,000 or less
trust as part of the decedent’s estate ($50,000 or less if married filing
may actively participate in a rental separately), figure your credits based Reporting Credits From the
real estate activity. Unless future on the amount of the maximum Activities
regulations provide an exception, special allowance referred to in the
preceding paragraph. Trade or business activities with
limited partners are not treated as material participation. If you
actively participating in a If your modified adjusted gross materially participated in a trade or
partnership’s rental real estate income is more than $100,000 business activity, the activity is not a
activity. ($50,000 if married filing separately) passive activity. Report the credits
A qualifying estate is the estate of but less than $150,000 ($75,000 if from the activity on the forms you
a decedent for tax years ending less married filing separately), your normally use.
than 2 years after the date of the special allowance is limited to 50% of
the difference between $150,000 Trade or business activities
decedent’s death if the decedent without material participation. If
would have satisfied the active ($75,000 if married filing separately)
and your modified adjusted gross you did not materially participate in a
participation requirements for the trade or business activity, the activity
rental real estate activity for the tax income.
is a passive activity. Generally, you
year the decedent died. Generally, if your modified must use Worksheet 4 on page 11 to
A qualified revocable trust may adjusted gross income is $150,000 or figure the amount to enter on Form
elect to be treated as part of a more ($75,000 or more if married 8582-CR for each trade or business
decedent’s estate for purposes of the filing separately), there is no special activity in which you did not materially
special allowance for active allowance. participate. However, if you held the
participation in rental real estate activity through a PTP, special rules
However, for low-income housing apply. See Publicly Traded
activities. The election must be made
credits for property placed in service Partnerships (PTPs) on page 15.
by both the executor (if any) of the
before 1990 and for rehabilitation
decedent’s estate and the trustee of
credits, the limits on modified
the revocable trust. For details, see
adjusted gross income are increased. Material Participation
Regulations section 1.645-1.
If your modified adjusted gross For the material participation tests
You are not considered to actively income is more than $200,000 that follow, participation generally
participate in a rental real estate ($100,000 if married filing separately) includes any work done in connection
activity if at any time during the tax but less than $250,000 ($125,000 if with an activity if you owned an
year your interest (including your married filing separately), your interest in the activity at the time you
spouse’s interest) in the activity was special allowance is limited to 50% of did the work. The capacity in which
less than 10% (by value) of all the difference between $250,000 you did the work does not matter.
interests in the activity. ($125,000 if married filing separately) However, work is not participation if:
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• It is not work that an owner would accounting, actuarial science, partnership’s tax year ending with or
customarily do in the same type of performing arts, consulting, or in any within your tax year (or, if shorter,
activity and other trade or business in which during the portion of the partnership’s
• One of your main reasons for doing capital is not a material tax year in which you directly or
the work was to avoid the income-producing factor. indirectly owned your limited partner
disallowance of losses or credits from 7. Based on all the facts and interest).
the activity under the passive activity circumstances, you participated in the A limited partner’s share of an
rules. activity on a regular, continuous, and electing large partnership’s taxable
Proof of participation. You may substantial basis during the tax year. income or loss from all trade or
prove your participation in an activity You did not materially participate in business and rental activities is
by any reasonable means. You do the activity under this seventh test, treated as income or loss from the
not have to maintain however, if you participated in the conduct of a single passive trade or
contemporaneous daily time reports, activity for 100 hours or less during business activity.
logs, or similar documents if you can the tax year. Special rules for certain retired or
establish your participation by other Your participation in managing the disabled farmers and surviving
reasonable means. For this purpose, activity does not count in determining spouses of farmers. Certain retired
reasonable means include, but are whether you materially participated or disabled farmers and surviving
not limited to, identifying services under this test if: spouses of farmers are treated as
performed over a period of time and a. Any person (except you) materially participating in a farming
the approximate number of hours received compensation for performing activity if the real property used in the
spent performing the services during services in the management of the activity meets the estate tax rules for
that period, based on appointment activity or special valuation of farm property
books, calendars, or narrative b. Any individual spent more passed from a qualifying decedent.
summaries. hours during the tax year performing See Temporary Regulations section
Tests for individuals. You services in the management of the 1.469-5T(h)(2).
materially participated for the tax year activity than you did (regardless of Estates and trusts. The PAC
in an activity if you satisfy at least one whether the individual was limitations apply to an estate or trust.
of the following tests. compensated for the management See Temporary Regulations sections
1. You participated in the activity services). 1.469-1T(b)(2) and (3). The rules for
for more than 500 hours. determining material participation for
Test for a spouse. Participation by this purpose have not yet been
2. Your participation in the activity your spouse during the tax year in an
for the tax year was substantially all issued.
activity you own may be counted as
of the participation in the activity of all your participation in the activity, even
individuals (including individuals who if your spouse did not own an interest
Grouping of Activities
did not own any interest in the in the activity and whether or not you Generally, one or more trade or
activity) for the year. and your spouse file a joint return for business activities or rental activities
3. You participated in the activity the tax year. may be treated as a single activity if
for more than 100 hours during the the activities make up an appropriate
tax year, and you participated at least Test for investors. Work done as an economic unit for the measurement of
as much as any other individual investor in an activity is not treated as gain or loss under the passive activity
(including individuals who did not own participation unless you were directly rules.
any interest in the activity) for the involved in the day-to-day
management or operations of the Whether activities make up an
year. appropriate economic unit depends
4. The activity is a significant activity. For purposes of this test,
work done as an investor includes: on all the relevant facts and
participation activity for the tax year, circumstances. The factors given the
and you participated in all significant 1. Studying and reviewing greatest weight in determining
participation activities during the year financial statements or reports on whether activities make up an
for more than 500 hours. operations of the activity. appropriate economic unit are:
A significant participation activity 2. Preparing or compiling
summaries or analyses of the 1. Similarities and differences in
is any trade or business activity in types of trades or businesses,
which you participated for more than finances or operations of the activity
for your own use. 2. The extent of common control,
100 hours during the year and in 3. The extent of common
which you did not materially 3. Monitoring the finances or
operations of the activity in a ownership,
participate under any of the material 4. Geographical location, and
participation tests (other than this nonmanagerial capacity.
5. Interdependencies between or
fourth test). among the activities.
5. You materially participated in Special rules for limited partners.
the activity for any 5 (whether or not If you were a limited partner in an Example. You have a significant
consecutive) of the 10 immediately activity, you generally did not ownership interest in a bakery and a
preceding tax years. materially participate in the activity. movie theater in Baltimore and in a
6. The activity is a personal You did materially participate in the bakery and a movie theater in
service activity in which you activity, however, if you met material Philadelphia. Depending on all the
materially participated for any 3 participation test 1, 5, or 6 (see Tests relevant facts and circumstances,
(whether or not consecutive) for individuals) for the tax year. there may be more than one
preceding tax years. However, for purposes of the reasonable method for grouping your
An activity is a personal service material participation tests, you are activities. For instance, the following
activity if it involves the performance not treated as a limited partner if you groupings may or may not be
of personal services in the fields of also were a general partner in the permissible.
health, law, engineering, architecture, partnership at all times during the • A single activity,
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• A movie theater activity and a 3. Any activity with another activity Dispositions
bakery activity, in a different type of business and in Unallowed PACs, unlike unallowed
• A Baltimore activity and a which you hold an interest as a passive activity losses, are not
Philadelphia activity, or limited partner or as a limited allowed when you dispose of your
• Four separate activities. entrepreneur (as defined in section interest in an activity. However, you
Once you choose a grouping 464(e)(2)), if that other activity may elect to increase the basis of the
under these rules, you must continue engages in holding, producing, or credit property by the amount of the
using that grouping in later tax years distributing motion picture films or original basis reduction of the
unless a material change in the facts videotapes; farming; leasing section property to the extent that the credit
and circumstances makes it clearly 1245 property; or exploring for (or has not been allowed under the
inappropriate. exploiting) oil and gas resources or passive activity rules. Unallowed
The IRS may regroup your geothermal deposits. PACs that are not used to increase
activities if your grouping fails to Activities conducted through the basis of the credit property are
reflect one or more appropriate partnerships, S corporations, and carried forward until they are allowed.
economic units and one of the C corporations subject to section To make the election, complete Form
primary purposes of your grouping is 469. Once a partnership or 8582-CR, Part VI. No basis
to avoid the passive activity corporation determines its activities adjustment may be elected on a
limitations. under these rules, a partner or partial disposition of your interest in a
Limitation on grouping certain shareholder may use these rules to passive activity.
activities. The following activities group those activities with:
may not be grouped together. • Each other, Example of How To
1. A rental activity with a trade or • Activities conducted directly by the Complete Form 8582-CR
business activity unless the activities partner or shareholder, or In 2004, John Jones purchased an
being grouped together make up an • Activities conducted through other interest as a limited partner in
appropriate economic unit and: partnerships and corporations. Partnership A. Mr. Jones is married
A partner or shareholder may not and files a joint return. During 2004,
a. The rental activity is
treat as separate activities those the partnership placed in service a
insubstantial relative to the trade or
activities grouped together by the residential rental building that
business activity or vice versa, or
partnership or corporation. qualified for the low-income housing
b. Each owner of the trade or
credit.
business activity has the same Partial disposition of an activity.
proportionate ownership interest in You may treat the disposition of • Mr. Jones received a Schedule K-1
from the partnership. The low-income
the rental activity. If so, the portion of substantially all of an activity as a
housing credit ($12,000) is shown on
the rental activity involving the rental separate activity if you can prove with
Schedule K-1 (Form 1065), line 15,
of property used in the trade or reasonable certainty:
with code A.
business activity may be grouped
with the trade or business activity.
1. The prior year unallowed • Mr. Jones’ net passive income for
losses, if any, allocable to the part of 2004 is zero.
2. An activity involving the rental the activity disposed of, and
of real property with an activity 2. The net income or loss for the
involving the rental of personal year of disposition allocable to the
property (except personal property part of the activity disposed of.
provided in connection with the real
property or vice versa).
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Step 1. Mr. Jones will need the following forms to report the low-income housing credit:
● Form 8586, Low-Income Housing Credit.
● Form 8582-CR, Passive Activity Credit Limitations.
Mr. Jones follows the instructions for code A on Schedule K-1, line 15, and enters the employer identification number (EIN) of the
partnership and the $12,000 low-income housing credit on Form 8586, line 5, and completes line 6.
8586
OMB No. 1545-0984
Low-Income Housing Credit
Form
Department of the Treasury

䊳 See instructions on back.
2004
Attachment
Internal Revenue Service (99) 䊳 Attach to your tax return. Sequence No. 36b
Name(s) shown on return Identifying number
John and Mary Jones 123-00-4567
Part I Current Year Credit
1 Number of Forms 8609 attached 䊳
2 Eligible basis of buildings (total from attached Schedules A (Form 8609), line 1) 2
3a Qualified basis of low-income buildings (total from attached Schedules A (Form 8609), line 3) 3a
b Has there been a decrease in the qualified basis of any buildings since the close of the preceding
tax year? Yes No If “Yes,” enter the building identification numbers (BINs) of the
buildings that had a decreased basis. If you need more space, attach a schedule.
(i) (ii) (iii) (iv)
4 Current year credit from attached Schedules A (Form 8609) (see instructions) 4
5 Low-income housing credits from pass-through entities (if more than one entity, see instructions):
If you are a— Then enter the total of the current year credits from—
其
a Shareholder Schedule K-1 (Form 1120S), box 13, codes A and B
b Partner Schedule K-1 (Form 1065), box 15, codes A and B, or 10 – 5566650 5 12,000
Schedule K-1 (Form 1065-B), box 8
c Beneficiary Schedule K-1 (Form 1041), line 14 EIN of pass-through entity
6 Add lines 4 and 5. See instructions to find out if you complete lines 7 through 18 or file Form 3800 6 12,000
7 Current year credit or passive activity credit (see instructions) 7
Step 2. Form 8586, line 7, asks for the passive activity credit for 2004. The amount is figured on Form 8582-CR and the worksheets.
Worksheet 3 of Form 8582-CR is used for post-1989 low-income housing credits.
Worksheet 3 for Lines 3a and 3b (keep for your records)

Current Year Prior Year
Credits Unallowed Credits Total Credits
From
Name of Activity Form
(a) Credit line 3a (b) Credit line 3b (c) Add cols. (a) and (b)
Partnership A 8586 12,000
Total. Enter on lines 3a and 3b of Form 8582-CR 䊳 12,000
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Step 3. Mr. Jones follows the instructions for Worksheet 3 and enters the total credits from column (a) of that worksheet on Form
8582-CR, line 3a. He enters the total credits on line 3c and completes lines 5 through 7. Mr. Jones can skip Parts II and III and go to
Part IV because the only credit he has is from a post-1989 low-income housing rental real estate activity. He must also complete the
computation for line 35 in the instructions to get the amount to enter on line 35 of the form (see page 8).
Form 8582-CR Passive Activity Credit Limitations OMB No. 1545-1034

䊳 See separate instructions. 2004
Attachment
Internal Revenue Service 䊳 Attach to Form 1040 or 1041. Sequence No. 89
Part I 2004 Passive Activity Credits
Caution: If you have credits from a publicly traded partnership, see Publicly Traded Partnerships (PTPs) on page 15
of the instructions.
Credits From Rental Real Estate Activities With Active Participation (Other Than Rehabilitation
Credits and Low-Income Housing Credits) (See Lines 1a through 1c on page 9.)
1a Credits from Worksheet 1, column (a) 1a
b Prior year unallowed credits from Worksheet 1, column (b) 1b
c Add lines 1a and 1b 1c

Rehabilitation Credits From Rental Real Estate Activities and Low-Income Housing Credits for
Property Placed in Service Before 1990 (or From Pass-Through Interests Acquired Before 1990)
(See Lines 2a through 2c on page 9.)

Low-Income Housing Credits for Property Placed in Service After 1989 (See Lines 3a through
3c on page 9.)
3a Credits from Worksheet 3, column (a) 3a 12,000
c Add lines 3a and 3b 3c 12,000
AllOther Passive Activity Credits (See Lines 4a through 4c on page 9.)
5 Add lines 1c, 2c, 3c, and 4c 5 12,000
6 Enter the tax attributable to net passive income (see page 9) 6 -0-
7 Subtract line 6 from line 5. If line 6 is more than or equal to line 5, enter -0- and see page 10 7 12,000
Note: If your filing status is married filing separately and you lived with your spouse at any time
during the year, do not complete Part II, III, or IV. Instead, go to line 37.
Part IV Special Allowance for Low-Income Housing Credits for Property Placed in Service After 1989
Note: Complete this part only if you have an amount on line 3c. Otherwise, go to Part V.
31 If you completed Part III, enter the amount from line 19. Otherwise, subtract line 16 from line 7 31 12,000
32 Enter the amount from line 30 32 -0-
33 Subtract line 32 from line 31. If zero, enter -0- here and on line 36 33 12,000
34 Enter the smaller of line 3c or line 33 34 12,000
35 Tax attributable to the remaining special allowance (see page 12) 35 8,250
36 Enter the smaller of line 34 or line 35 36 8,250
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Line 35 computation:
Line 35. Figure the tax attributable to the remaining special allowance as follows:
A. Taxable income 305,000
B. Tax on line A. For Form 1040, use the Tax Table, Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax
Worksheet, or the Schedule D Worksheet, whichever applies. For Form 1041, use the Tax Rate Schedules, the Qualified Dividends 81,675
Tax Worksheet, or Schedule D whichever applies
C. Enter $25,000 ($12,500 if married filing separate return and you and your spouse lived apart at
all times during the year) 25,000
D. Enter amount, if any, from line 10 of Form 8582 -0-
E. Enter amount, if any, from line 14 of Form 8582 -0-
F. Subtract lines D and E from line C 25,000
G. Subtract line F from line A 280,000
H. Tax on line G. For Form 1040, use the Tax Table, Tax Computation Worksheet, the Qualified Dividends and Capital Gain Tax
Worksheet, or the Schedule D Worksheet, whichever applies. For Form 1041, use the Tax Rate Schedules, the Qualified Dividends
Tax Worksheet, or Schedule D whichever applies 73,425
I. Subtract line H from line B 8,250
J. Add lines 16 and 30 of Form 8582-CR and enter the total -0-
K. Tax attributable to the remaining special allowance. Subtract line J from line I. Enter the result on line 35 of Form 8582-CR 8,250
Note: When using taxable income in the above computation, it is not necessary to refigure items that are based on a percentage
of adjusted gross income.
Step 4. Mr. Jones completes Form 8582-CR, Part V.
Part V Passive Activity Credit Allowed
37 Passive Activity Credit Allowed. Add lines 6, 16, 30, and 36. See page 12 to find out how to
report the allowed credit on your tax return and how to allocate allowed and unallowed credits if
you have more than one credit or credits from more than one activity. If you have any credits from
a publicly traded partnership, see Publicly Traded Partnerships (PTPs) on page 15 37 8,250
Step 5. After completing Form 8582-CR, Mr. Jones determines his allowed and unallowed credit. Because he has only one type of
credit from a single passive activity, his allowed low-income housing credit for 2004 is the amount on line 37, or $8,250. His unallowed
credit of $3,750 is determined by subtracting the allowed credit on line 37 from the total credit on line 5 ($12,000 – $8,250).
Step 6. Mr. Jones enters the allowed passive activity credit of $8,250 on line 7 of Form 8586 and completes Part II of that form
according to the instructions for Form 8586. The unallowed credit of $3,750 is carried forward and used to figure the passive activity
credit allowed for 2005.
8586
OMB No. 1545-0984
Low-Income Housing Credit
Form

䊳 See instructions on back.
2004
Attachment
Internal Revenue Service (99) 䊳 Attach to your tax return. Sequence No. 36b
Part I Current Year Credit
1 Number of Forms 8609 attached 䊳
2 Eligible basis of buildings (total from attached Schedules A (Form 8609), line 1) 2
3a Qualified basis of low-income buildings (total from attached Schedules A (Form 8609), line 3) 3a
b Has there been a decrease in the qualified basis of any buildings since the close of the preceding
tax year? Yes No If “Yes,” enter the building identification numbers (BINs) of the
buildings that had a decreased basis. If you need more space, attach a schedule.
(i) (ii) (iii) (iv)
4 Current year credit from attached Schedules A (Form 8609) (see instructions) 4
5 Low-income housing credits from pass-through entities (if more than one entity, see instructions):
If you are a— Then enter the total of the current year credits from—
其
a Shareholder Schedule K-1 (Form 1120S), box 13, codes A and B
b Partner Schedule K-1 (Form 1065), box 15, codes A and B, or 10 – 5566650 5 12,000
Schedule K-1 (Form 1065-B), box 8
c Beneficiary Schedule K-1 (Form 1041), line 14 EIN of pass-through entity
6 Add lines 4 and 5. See instructions to find out if you complete lines 7 through 18 or file Form 3800 6 12,000
7 Current year credit or passive activity credit (see instructions) 7 8,250
-8-
If you had only one type of prior estate activities or low-income

Specific Instructions year unallowed credit from a single
passive activity, figure your prior year
housing credits for property placed in
service before 1990 must include the
unallowed credit by subtracting line credits from those activities on lines
Current Year Credits 37 of your 2003 Form 8582-CR from 2a through 2c. Use Worksheet 2 to
Convert any current year qualified line 5 of your 2003 Form 8582-CR. figure the amounts to enter on lines
expenditures into credits before Otherwise, your prior year 2a and 2b.
beginning Worksheet 1, 2, 3, or 4. unallowed credits are the amounts
Form 3800, General Business If you have low-income housing
shown in column (b) of Worksheet 9 credits for property placed in service
Credit. Enter the credits from Form in the 2003 Instructions for Form
3800, line 3 in column (a) of after 1989, include those credits in
8582-CR. Enter the prior year Worksheet 3 instead of Worksheet 2.
Worksheet 1, 2, 3, or 4. If the credits unallowed credits in column (b) of
are from more than one activity or are If you held an indirect interest in the
Worksheet 1, 2, 3, or 4, whichever property through a partnership, S
of more than one type, separate the apply.
credits by activity or type before corporation, or other pass-through
making entries in the worksheets. entity, use Worksheet 3 only if you
also acquired your interest in the
Example. You have a low-income Part I—2004 Passive pass-through entity after 1989.
housing credit from one activity and a
research credit from a different Activity Credits Include the credits in
Use Part I to combine your credits
activity. Enter the low-income housing
credit in column (a) of Worksheet 2 or from passive activities to determine if ! Worksheet 4, but not in
CAUTION Worksheet 2 or 3, if you are
3 and make a separate entry for the you have a PAC for 2004. married filing a separate return and
research credit in column (a) of If your credits from all passive lived with your spouse at any time
Worksheet 4. activities exceed the tax attributable during the year.
Form 8586, Low-Income Housing to net passive income, you have a
Credit. If you are not required to file PAC for 2004. Generally, you have Lines 3a through 3c. Individuals
Form 3800, enter the portion of the net passive income if line 4 of Form (including limited partners) and
credit attributable to passive activities 8582 shows income. For more qualifying estates who had
from Form 8586, line 6 in column (a) information, see the instructions for low-income housing credits from
of Worksheet 2 or 3. Form 8582-CR, line 6 beginning on rental real estate activities for
this page. property placed in service after 1989
Form 8834, Qualified Electric must include those credits on lines 3a
Vehicle Credit. Enter the credits Lines 1a through 1c. Individuals through 3c instead of Worksheet 2. If
from Form 8834, line 11 in column (a) and qualifying estates that actively you held an indirect interest in the
of Worksheet 1 or 4. If the credits are participated in rental real estate property through a partnership, S
from more than one activity, separate activities must include the credits corporation, or other pass-through
the credits by activity before making (other than rehabilitation credits or entity, use lines 3a through 3c only if
entries in the worksheet. low-income housing credits) from you also acquired your interest in the
Form 8844, Empowerment Zone these activities on lines 1a through pass-through entity after 1989. Use
and Renewal Community 1c. Use Worksheet 1 to figure the Worksheet 3 to figure the amounts to
Employment Credit. Enter the amounts to enter on lines 1a and 1b. enter on lines 3a and 3b.
credits from Form 8844, line 5 in See Special Allowance for Rental
column (a) of Worksheet 1 or 4. If the Real Estate Activities on page 3. Lines 4a through 4c. Individuals
credits are from more than one must include on lines 4a through 4c
If you are married filing a credits from passive activities that
activity, separate the credits by
activity before making entries in the ! separate return and lived with
CAUTION your spouse at any time
were not entered on Worksheets 1, 2,
worksheet. or 3. Trusts must include credits from
during the year, even if you actively all passive activities in Worksheet 4.
Nonconventional source fuel participated in the rental real estate
credit. Figure your credit from Use Worksheet 4 to figure the
activity, include the credits in amounts to enter on lines 4a and 4b.
passive activities for fuel produced Worksheet 4, not in Worksheet 1.
from a nonconventional source and Line 6. If Form 8582, line 4 shows
enter the credit in column (a) of Note. You may take credits that net income or you did not complete
Worksheet 4. arose in a prior tax year (other than Form 8582 because you had net
low-income housing and rehabilitation passive income, you must figure the
See section 29 for more
credits) under the special allowance tax on the net passive income. If you
information on the credit for fuel
only if you actively participated in the have an overall loss on an entire
produced from a nonconventional
rental real estate activity for both that disposition of your interest in a
source.
prior year and this year. If you did not passive activity, reduce net passive
actively participate for both years,
Prior Year Unallowed include the credits in Worksheet 4,
income, if any, on Form 8582, line 4
to the extent of the loss (but not
Credits not in Worksheet 1. below zero) and use only the
To figure this year’s PAC, you must Lines 2a through 2c. Individuals remaining net passive income in the
take into account any credits from (including limited partners) and computation on page 10. If you had a
passive activities disallowed for prior qualifying estates who had net passive activity loss, enter -0- on
years and carried forward to this year. rehabilitation credits from rental real line 6 and go on to line 7.
-9-
Figure the tax on net passive credits from passive activities are Line 9. Married persons filing
income as follows. allowed. In this case, enter the separate returns who lived apart from
amount from line 5 on line 37 and their spouses at all times during the
A. Taxable income
including net
report the credits on the forms year must enter $75,000 on line 9
passive income . . . . . normally used. Do not complete instead of $150,000. Married persons
Worksheets 5 through 9. filing separate returns who lived with
B. Tax on line A* . . . . . . . . . . . . . .
their spouses at any time during the
C. Taxable income without year are not eligible for the special
net passive income . . .
allowance. They must enter -0- on
D. Tax on line C* . . . . . . . . . . . . . . Part II—Special line 16 and go to line 17.
E. Subtract line D from line B
and enter the result on
Allowance for Rental Line 10. To figure modified adjusted
Form 8582-CR, line 6 . . . . . . . . . Real Estate Activities gross income, combine all the
amounts used to figure adjusted
* For Form 1040, use the Tax Table, Tax Computation
Worksheet, the Qualified Dividends and Capital Gain With Active Participation gross income except do not take into
Tax Worksheet, or the Schedule D Tax Worksheet,
whichever applies. For Form 1041, use the Tax Rate account:
Schedules, Qualified Dividends Tax Worksheet, or
Married persons filing • Any passive activity loss as defined
Schedule D, whichever applies. ! separate returns who lived
CAUTION with their spouses at any time
in section 469(d)(1);
during the year are not eligible to • Any rental real estate loss allowed
Note. When using taxable income in to real estate professionals (defined
the above computation, it is not complete Part II.
under Activities That Are Not Passive
necessary to refigure items that are Use Part II to figure the credit Activities on page 1);
based on a percentage of adjusted allowed if you have any credits from • Any overall loss from a PTP;
gross income. rental real estate activities in which • The taxable amount of social
Line 7. If line 7 is zero because the you actively participated (other than security and tier 1 railroad retirement
tax on the net passive income on line rehabilitation credits and low-income benefits;
6 is greater than your credits from housing credits). See Rental Activities • The deduction allowed under
passive activities on line 5, all your on page 2 for details. section 219 for contributions to IRAs
Lines 1a and 1b. Use Worksheet 1 to figure the amounts to enter on lines 1a and 1b. Use line 1a for credits from rental real estate
activities with active participation for the current year and line 1b for prior year unallowed credits from rental real estate activities with
active participation in both the prior year in which the credit arose and the current year. See Special Allowance for Rental Real Estate
Activities on page 3 for a definition of active participation.
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and then
complete line 1c.
Note. Rehabilitation credits from rental real estate activities and low-income housing credits must be entered in Worksheet 2 or 3,
whichever applies, even if you actively participated in the activity.

From
Totals. Enter on lines 1a and 1b of Form 8582-CR 䊳
Lines 2a and 2b. Use Worksheet 2 to figure the amounts to enter on lines 2a and 2b. Use line 2a for rehabilitation credits and
low-income housing credits from rental real estate activities for the current year and line 2b for prior year unallowed credits from those
activities. However, use Worksheet 3 instead of Worksheet 2 if you have any low-income housing credits for property placed in service
after 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through entity, use
Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use this worksheet if you do not meet both
requirements.
After you complete the worksheet below, enter the totals of columns (a) and (b) on the corresponding lines of Form 8582-CR and
then complete line 2c.
From
-10-
and certain other qualified retirement Pub. 925 or Temporary Regulations spouses at any time during the year
plans; section 1.469-2T(f) and Regulations are not eligible for the special
• The deduction allowed for one-half section 1.469-2(f). allowance. They must enter -0- on
of self-employment taxes; line 16 and go to line 17.
When figuring modified adjusted
• The exclusion from income of gross income, any overall loss from Line 15. Figure the tax attributable to
interest from series EE and I U.S. an entire disposition of an interest in the amount on line 14 as follows.
savings bonds used to pay higher a passive activity is taken into A. Taxable income . . . . . . .
education expenses; account as a nonpassive loss if you
• The exclusion of amounts received do not have any net passive income B. Tax on line A* . . . . . . . . . . . . . .
under an employer’s adoption after combining net income and C. Enter amount from line 14
of Form 8582-CR . . . . . .
assistance program; losses from all other passive activities
• The student loan interest (that is, Form 8582, line 4 is a loss or D. Subtract line C from line A
deduction; or zero). If you do have net passive E. Tax on line D* . . . . . . . . . . . . . .
• The tuition and fees deduction. income when you combine the net F. Subtract line E from line B
losses and net income from all other and enter the result on
Include in modified adjusted gross passive activities, the overall loss Form 8582-CR, line 15 . . . . . . . .
income any portfolio income and from the disposition is taken into * For Form 1040, use the Tax Table, Tax Computation
expenses that are clearly and directly account as a nonpassive loss only to Worksheet, the Qualified Dividends and Capital Gain
the extent that it exceeds that net Tax Worksheet, or the Schedule D Tax Worksheet,
allocable to portfolio income. Also whichever applies. For Form 1041, use the Tax Rate
include any income that is treated as passive income. Schedules, Qualified Dividends Tax Worksheet, or
Schedule D, whichever applies.
nonpassive income, such as overall Line 12. Do not enter more than
gain from a PTP and net income from $12,500 on line 12 if you are married Note. When using taxable income in
an activity or item of property subject filing a separate return and you and the above computation, it is not
to the recharacterization of passive your spouse lived apart at all times necessary to refigure items that are
income rules. For information on during the year. Married persons filing based on a percentage of adjusted
recharacterization of income, see separate returns who lived with their gross income.
Lines 3a and 3b. Use Worksheet 3 to figure the amounts to enter on lines 3a and 3b for low-income housing credits for property
placed in service after 1989. If you held an indirect interest in the property through a partnership, S corporation, or other pass-through
entity, use Worksheet 3 only if you also acquired your interest in the pass-through entity after 1989. Use line 3a for the current year
credits and line 3b for prior year unallowed credits for those activities.

From
Lines 4a and 4b. Use Worksheet 4 to figure the amounts to enter on lines 4a and 4b. Use line 4a for credits from all other passive
activities for the current year and line 4b for prior year unallowed credits from those activities.

From
-11-
*For Form 1040, use the Tax Table, Tax Computation *For Form 1040, use the Tax Table, Tax Computation
Worksheet, the Qualified Dividends and Capital Gain Worksheet, the Qualified Dividends and Capital Gain
Part III—Special Tax Worksheet, or the Schedule D Tax Worksheet,
whichever applies. For Form 1041, use the Tax Rate
Tax Worksheet, or the Schedule D Tax Worksheet,
whichever applies. For Form 1041, use the Tax Rate
Schedules, Qualified Dividends Tax Worksheet, or Schedules, Qualified Dividends Tax Worksheet, or
Allowance for Schedule D, whichever applies. Schedule D, whichever applies.
Rehabilitation Credits Note. When using taxable income in Note. When using taxable income in
From Rental Real Estate the above computation, it is not the above computation, it is not
necessary to refigure items that are necessary to refigure items that are
Activities and based on a percentage of adjusted based on a percentage of adjusted
gross income. gross income.
Low-Income Housing
Credits for Property
Placed in Service Before Part IV—Special Part V—Passive Activity
1990 (or From Allowance for Credit Allowed
Low-Income Housing Use Part V to figure the PAC (as
Pass-Through Interests determined in Part I) that is allowed
Acquired Before 1990) Credits for Property for 2004 for all passive activities.
Placed in Service After Line 37. If you have only one type of
Married persons filing credit, the amount on line 37 is the
1989 credit allowed for the year. Enter this
! separate returns who lived
CAUTION with their spouses at any time amount on the form where it is
during the year are not eligible to Married persons filing normally reported. See Reporting
complete Part III. ! separate returns who lived
CAUTION with their spouses at any time
Allowed Credits on Your Tax Return
below. Your unallowed credit is line 5
Use Part III to figure the credit during the year are not eligible to minus line 37.
allowed if you have any rehabilitation complete Part IV.
credits or low-income housing credits Use Worksheets 5 through 9,
for property placed in service before Use Part IV to figure the credit whichever apply, on pages 13 and
1990. Also use this part if your allowed if you have any low-income 14, to allocate the allowed and
low-income housing credit is from a housing credits for property placed in unallowed credits if you have credits
partnership, S corporation, or other service after 1989. If you held an from more than one activity. Also use
pass-through entity in which you indirect interest in the property the worksheets if you must allocate
acquired your interest before 1990, through a partnership, S corporation, the credits because they are reported
regardless of the date the property or other pass-through entity, use Part on different forms.
was placed in service. IV only if your interest in the Keep a record of each unallowed
pass-through entity was also acquired credit and the activity to which it
Line 21. Married persons filing after 1989.
separate returns who lived apart from belongs so you may claim the credit if
their spouses at all times during the Line 35. Figure the tax attributable to it becomes allowable in a future year.
year must enter $125,000 on line 21, the remaining special allowance as
follows. Reporting Allowed Credits
instead of $250,000.
on Your Tax Return
Skip lines 21 through 26 if you A. Taxable income . . . . . . . . .
completed Part II of this form and Form 3800. Enter on Form 3800, line
B. Tax on line A* . . . . . . . . . . . . . . . 5 the total passive activity general
your modified adjusted gross income
on line 10 was $100,000 or less C. Enter $25,000 business credit allowed.
($50,000 or less if married filing ($12,500 if married
filing separate return
Form 8586. If you are not required to
separately and you lived apart from and you and your file Form 3800, enter on Form 8586,
your spouse for the entire year). spouse lived apart at line 7 any allowed low-income
Instead, enter the amount from line all times during the housing credit.
15 on line 27. year) . . . . . . . . . . .
Form 8834. Enter on Form 8834, line
Line 24. Do not enter more than D. Enter amount, if 13 the passive activity qualified
any, from of Form
$12,500 on line 24 if you are married 8582, line 10 . . . . . . electric vehicle credit allowed.
filing a separate return and lived apart Form 8844. Enter on Form 8844, line
from your spouse for the entire year. E. Enter the amount,
if any, from Form 7 the passive activity empowerment
Line 27. Figure the tax attributable to 8582, line 14 . . . . . . zone and renewal community
the amount on line 26 as follows. F. Subtract lines D and E employment credit allowed.
from line C . . . . . . . . . . . . Nonconventional Source Fuel
A. Taxable income . . . . . . . Credit. If you have an allowed
G. Subtract line F from line A . . .
B. Tax on line A* . . . . . . . . . . . . . . .
H. Tax on line G* . . . . . . . . . . . . . . .
passive activity credit for fuel
C. Enter amount from line 26 produced from a nonconventional
I. Subtract line H from line B . . . . . . . source, see section 29 for limitations
of Form 8582-CR . . . . . .
D. Subtract line C from line A
J. Add lines 16 and 30 of and adjustments to the credit. Attach
Form 8582-CR and enter the total . . . a separate schedule to your tax
E. Tax on line D* . . . . . . . . . . . . . . . return showing how you figured the
K. Tax attributable to the remaining
F. Subtract line E from line B and enter special allowance. Subtract line J credit. If you have both passive and
the result on Form 8582-CR, line 27 from line I. Enter the result on nonpassive credits, combine the
Form 8582-CR, line 35 . . . . . . . . . .
credits before applying the limitations
and adjustments. Report the credit on
the line specified by the instructions
for the tax return you file.
-12-
Instructions for Worksheet 5

Complete Worksheet 5 if you have an amount on Form 8582-CR, line 1c and you have credits from more than one activity.
Column (a). Enter the credits from Worksheet 1, column (c), in column (a) of this worksheet.
Column (b). Divide each of the credits shown in column (a) by the total of the credits in column (a) and enter the ratio for each of the
activities in column (b). The total of all the ratios must equal 1.00.
Column (c). Multiply Form 8582-CR, line 16 by the ratios in column (b) and enter the result in column (c). If the total of this column is
the same as the total of column (a), all credits for the activities in column (a) of this worksheet are allowed. Report them on the forms
normally used, and complete Worksheet 6 if you have credits shown in Worksheet 2. Also complete Worksheet 7 or 8 if you have
credits shown in Worksheet 3 or 4. If the total of column (a) is more than the total of column (c), complete column (d).
Column (d). Subtract column (c) from column (a) and enter the result in this column. Also enter the name of each activity and the form
the credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8. Also
complete Worksheet 6 or 7 if you have credits on Form 8582-CR, line 2c or 3c.
Worksheet 5 for Credits on Line 1a or 1b (keep for your records)
Form To Be (c) Special (d) Subtract

Name of Activity Reported on (a) Credits (b) Ratios Allowance column (c) from
column (a)
Totals 䊳 1.00
Complete Worksheet 6 if you have an amount on Form 8582-CR, line 2c and you have credits from more than one activity.
normally used, and complete Worksheet 7 or 8 if you have credits shown in Worksheet 3 or 4 or amounts in column (d) of Worksheet 5.
If the total of column (a) is more than the total of column (c), complete column (d).
the credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.

Name of Activity (a) Credits (b) Ratios column (c) from
Reported on Allowance column (a)
Totals 䊳 1.00
-13-

Complete Worksheet 7 if you have credits on Form 8582-CR, line 3c and you have credits from more than one activity.
normally used, and complete Worksheet 8 if you have credits shown in Worksheet 4 or amounts in column (d) of Worksheet 5 or 6. If
the total of column (a) is more than the total of column (c), complete column (d).
the credit is reported on in Worksheet 8 and enter the amount from column (d) of this worksheet in column (a) of Worksheet 8.
Name of Activity Reported on (a) Credits (b) Ratios column (c) from
Allowance column (a)
Totals 䊳 1.00

Complete Worksheet 8 if you have credits on Form 8582-CR, line 4c from more than one activity or reported on different forms or you
have amounts in column (d) of Worksheets 5, 6, or 7.
Column (a). Enter the amounts, if any, from column (c) of Worksheet 4 and column (d) of Worksheets 5, 6, and 7.
Column (b). Divide each of the credits in column (a) by the total of all the credits in column (a) and enter the ratio for each of the
Column (c). Complete the following computation:
A. Enter Form 8582-CR, line 5
B. Enter Form 8582-CR, line 37
C. Subtract line B from line A
Multiply line C by the ratios in column (b) and enter the results in column (c). Complete Worksheet 9 to determine the credits allowed
for 2004.
Worksheet 8—Allocation of Unallowed Credits (keep for your records)
Name of Activity Form To Be
Reported on (a) Credits (b) Ratios (c) Unallowed Credits
Totals 䊳 1.00

Column (a). Enter all the activities shown in Worksheet 8. The credits entered in column (a) of this worksheet are the credits shown in
column (c) of Worksheets 1, 2, 3, and 4 for the activities listed in Worksheet 8.
Column (b). Enter the amounts from column (c) of Worksheet 8 in this column. These are your unallowed credits for 2004.
Column (c). Subtract column (b) from column (a). These are the allowed credits for 2004. Report the amounts in this column on the
forms normally used. See Reporting Allowed Credits on Your Tax Return on page 12.
Worksheet 9—Allowed Credits (keep for your records)
Name of Activity Form To Be
Reported on (a) Credits (b) Unallowed Credits (c) Allowed Credits
Totals 䊳
-14-
Computation of Allowed housing credits from PTPs in which

Publicly Traded you acquired your interest before
Passive Activity Credits 1990 (regardless of the date placed in
Partnerships (PTPs) From PTPs service) allowed under the special
A PTP is a partnership whose Complete Steps 1 and 2 only if you allowance are the smaller of the total
interests are traded on an established have net passive income from a PTP credits from Step 3 or the amount
securities market or are readily with passive activity credits (including figured in Step 4. If Step 4 is smaller
tradable on a secondary market (or prior year unallowed credits). than Step 3, allocate the amount in
its substantial equivalent). Step 1. Figure the tax attributable to Step 4 pro rata to the credits from
net passive income from each PTP each PTP in Step 3.
An established securities market
includes any national securities with passive activity credits (including
prior year unallowed credits) by Complete Steps 6 through 8 only if
exchange and any local exchange you have low-income housing credits
registered under the Securities following the steps shown in the
worksheet in the line 6 instructions (including prior year unallowed
Exchange Act of 1934 or exempted beginning on page 9. Complete a credits) for property placed in service
from registration because of the separate tax computation for each after 1989 from a PTP in which you
limited volume of transactions. It also PTP with net passive income. acquired your interest after 1989.
includes any over-the-counter market.
Step 2. Passive activity credits from Step 6. Reduce low-income housing
A secondary market generally each PTP are allowed to the extent of credits (including prior year unallowed
exists if a person stands ready to the tax attributable to net passive credits) for property placed in service
make a market in the interest. An income from the same PTP. Credits after 1989 from each PTP in which
interest is treated as readily tradable in excess of the tax attributable to net you also acquired your interest after
if the interest is regularly quoted by passive income may be allowed 1989 to the extent of the tax
persons, such as brokers or dealers, under one or more steps below. attributable to net passive income
who are making a market in the Complete Steps 3 through 5 only if from that PTP, which was figured in
interest. your passive activity credits (including Step 1.
prior year unallowed credits) include
The substantial equivalent of a rehabilitation credits from rental real Step 7. Before beginning this step,
secondary market exists if there is no estate activities from PTPs, complete Form 8582-CR if you have
identifiable market maker, but holders low-income housing credits for any passive credits that are not from
property placed in service before PTPs. Subtract the sum of the credits
of interests have a readily available,
1990 from PTPs, or low-income allowed in Step 5 above and Form
regular, and ongoing opportunity to 8582-CR, line 36 from the amount on
sell or exchange their interests housing credits from PTPs in which
you acquired your interest before Form 8582-CR, line 35 to figure the
through a public means of obtaining tax attributable to the special
or providing information on offers to 1990 (regardless of the date placed in
service). allowance available for the credits in
buy, sell, or exchange interests. Step 6.
Similarly, the substantial equivalent of Step 3. Reduce rehabilitation credits
a secondary market exists if from rental real estate activities from If your only passive credits are
prospective buyers and sellers have each PTP, low-income housing from PTPs, complete the steps
the opportunity to buy, sell, or credits for property placed in service shown in the worksheet in the line 35
exchange interests in a timeframe before 1990 from each PTP, and any instructions on page 12. Subtract the
and with the regularity and continuity low-income housing credits (including credits allowed in Step 5 above from
that the existence of a market maker prior year unallowed credits) from the tax figured on line K of that
each PTP in which you acquired your worksheet. The result is the tax
would provide. interest before 1990 (regardless of attributable to the special allowance
the date placed in service) to the available for the credits in Step 6.
Credits From PTPs extent of the tax, which was figured in
A credit from a passive activity held Step 1, attributable to net passive Step 8. Low-income housing credits
through a PTP is allowed to the income from that PTP. allowed under the special allowance
extent of the tax attributable to net Step 4. Before beginning this step, for property placed in service after
passive income from that partnership. complete Form 8582-CR if you have 1989 from a PTP in which you also
In addition, rehabilitation credits and any passive credits that are not from acquired your interest after 1989 are
low-income housing credits from PTPs. Subtract the total of lines 16, the smaller of the total credits from
rental real estate activities held 30, and 36, if any, of Form 8582-CR, Step 6 or the amount figured in Step
through PTPs are allowed to the from the amount on line 27 of Form 7. If Step 7 is smaller than Step 6,
extent of any special allowance that 8582-CR, to figure the tax attributable allocate the amount in Step 7 pro rata
remains after taking into account to the special allowance available for to the credits from each PTP in Step
losses and credits from rental real the credits in Step 3. 6.
estate activities not owned through If your only passive credits are Step 9. Add the credits from Steps 2,
PTPs. See Special Allowance for from PTPs, complete lines 21 through 5, and 8. These are the total credits
Rental Real Estate Activities on page 27 of Form 8582-CR as a worksheet. allowed from passive activities of
3. The amount on line 27 is the tax PTPs.
attributable to the special allowance
Do not enter credits from available for the credits in Step 3. Step 10. Figure the allowed and
! PTPs on the worksheets or on
CAUTION Form 8582-CR. Instead, use
Step 5. Rehabilitation credits from
rental real estate activities of PTPs,
unallowed credits from each PTP.
Report the allowed credits on the
the following steps to figure the low-income housing credits for forms normally used. Keep a record
allowed and unallowed credits from property placed in service before of the unallowed credits to be carried
passive activities held through PTPs. 1990 by PTPs, and low-income forward to 2005.
-15-
previously because of the passive records relating to a form or its

activity credit limitations. The amount instructions must be retained as long
Part VI—Election To of the unallowed credit that may be as their contents may become
Increase Basis of Credit applied against tax is reduced by the material in the administration of any
amount of the basis adjustment. Internal Revenue law. Generally, tax
Property No basis adjustment may be returns and return information are
Complete Part VI if you disposed of elected on a partial disposition of your confidential, as required by section
your entire interest in a passive interest in a passive activity or if the 6103.
activity and elect to increase the disposition is not fully taxable. The The time needed to complete and
basis of the credit property used in amount of any unallowed credit, file this form will vary depending on
the activity by the unallowed credit however, remains available to offset individual circumstances. The
that reduced the basis of the the tax attributable to net passive estimated average time is:
property. income. Recordkeeping . . . . . . . . . 2 hr., 4 min.
Line 38. Check the box if you elect to
increase the basis of credit property Learning about the law or
used in a passive activity by the Paperwork Reduction Act Notice. the form . . . . . . . . . . . . . . 6 hr., 4 min.
unallowed credit that reduced the We ask for the information on this Preparing the form . . . . . . . 4 hr., 19 min.
property’s basis. The election is form to carry out the Internal
Copying, assembling, and
available for a fully taxable disposition Revenue laws of the United States. sending the form to the IRS 1 hr., 9 min.
of an entire interest in an activity for You are required to give us the
which a basis adjustment was made information. We need it to ensure that If you have comments concerning
as a result of placing in service you are complying with these laws the accuracy of these time estimates
property for which a credit was taken. and to allow us to figure and collect or suggestions for making this form
You may elect to increase the basis the right amount of tax. simpler, we would be happy to hear
of the credit property immediately You are not required to provide the from you. See the instructions for the
before the disposition (by an amount information requested on a form that tax return with which this form is filed.
no greater than the amount of the is subject to the Paperwork Reduction
original basis reduction) to the extent Act unless the form displays a valid
that the credit had not been allowed OMB control number. Books or
-16-

US Internal Revenue Service: I8582cr - 2004

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Userid: ________ Leading adjust: -35% ❏ Draft ❏ Ok to Print

PAGER/SGML Fileid: I8582CR.SGM (14-Jan-2005) (Init. & date)

Page 1 of 16 Instructions for Form 8582-CR 14:48 - 14-JAN-2005

2004 Department of the Treasury

Instructions for Form

• Enhanced oil recovery credit. performed in real property trades or

Cat. No. 64649B

Department of the Treasury

Worksheet 3 for Lines 3a and 3b (keep for your records)

Partnership A 8586 12,000

Total. Enter on lines 3a and 3b of Form 8582-CR 䊳 12,000

Form 8582-CR Passive Activity Credit Limitations OMB No. 1545-1034

Department of the Treasury

1a Credits from Worksheet 1, column (a) 1a

b Prior year unallowed credits from Worksheet 1, column (b) 1b

c Add lines 1a and 1b 1c

b Prior year unallowed credits from Worksheet 2, column (b) 2b

c Add lines 2a and 2b 2c

36 Enter the smaller of line 34 or line 35 36 8,250

Department of the Treasury

If you had only one type of prior estate activities or low-income

Worksheet 1 for Lines 1a and 1b (keep for your records)

Totals. Enter on lines 1a and 1b of Form 8582-CR 䊳

Totals. Enter on lines 2a and 2b of Form 8582-CR 䊳

Worksheet 3 for Lines 3a and 3b (keep for your records)

Totals. Enter on lines 3a and 3b of Form 8582-CR 䊳

Worksheet 4 for Lines 4a and 4b (keep for your records)

Totals. Enter on lines 4a and 4b of Form 8582-CR 䊳

Instructions for Worksheet 5

Worksheet 5 for Credits on Line 1a or 1b (keep for your records)

Form To Be (c) Special (d) Subtract

Worksheet 6 for Credits on Line 2a or 2b (keep for your records)

Instructions for Worksheet 7

Instructions for Worksheet 8

Instructions for Worksheet 9

Computation of Allowed housing credits from PTPs in which

previously because of the passive records relating to a form or its

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